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Vermont's hospital system is treading on increasingly shaky financial ground

Vermont hospitals recently submitted their budget requests to the Green Mountain Care Board, which regulates the hospital network.

It’s budget season, and Vermont hospitals are asking for steep rate hikes, at a time when regulators are trying to rein in spending.

Vermont Public’s Mitch Wertlieb spoke with reporter Howard Weiss-Tisman about recent budget hearings. Their conversation below has been edited and condensed for clarity.

Mitch Wertlieb: So Howard, let’s talk about how the hospitals are doing. We’re coming out of a pandemic — and it’s been a rough couple of years for the hospitals, right?

Howard Weiss-Tisman: Yeah, it's definitely been a rough time over the past couple of years. At the height of the pandemic, the hospitals were shut down to routine care. So, they've lost a lot of revenue over the past few years. We've been hearing a lot about workforce shortages. And when hospitals don't have nurses, they have to pay traveling nurses — and they're very expensive. According to the latest numbers, the hospitals are looking at spending almost 60% more this year than they were on traveling nurses. And then on top of all that, now we're dealing with inflation. And hospitals are paying more for medicine and medical equipment, which is all being affected by the high energy prices.

So, like you said, it's budget season, and as part of that the hospitals had to hand in their current numbers. Nine of the state's 14 hospitals are expected to lose money this year. And what's really troubling is the larger hospitals like UVM Medical Center, and Rutland Regional Medical Center, Central Vermont Medical Center, they're expected to lose tens of millions of dollars this year. And that drags down the whole system, because the big players are losing so much money. UVM alone says that it expects to lose $43 million this year. It's real money.

And so, on top of all that the hospitals have gotten a lot of money over the past few years; they've gotten hundreds of millions in COVID relief. That money is drying up. So, the hospitals are coming into this budget season deep in the red and about to fall off this federal cliff. So it's really not a good situation.

Well, given all of that, Howard, hospitals recently submitted their budget requests to the Green Mountain Care Board, which regulates the hospital network. So what did we learn about those requests?

We learned that the hospitals are asking for a lot of money. You know, the hospitals usually get about a 4% or 5% increase, but this year, they're asking for 12% to 14% or 17% rate increases. This is the money that shows up in people's insurance. Small business owners who provide insurance for their workers and folks who buy their own insurance, they're going to see some really steep rate hikes if these budgets are approved as they're submitted.

A lot of the reporting you've done has been on the sustainability planning that the state is trying to do with these hospitals. How are regulators going to balance that Howard? I mean, trying to right-size the system and maybe consolidate some health care services all while also giving the hospitals what they're asking for?

Well, that's what's going to be really fascinating to watch this year. So last year, the Green Mountain Care Board did an assessment of the whole hospital system. And at least according to the consultant's report on paper, it seems like Vermont has more beds than it needs. Now, the Green Mountain Care Board is trying to get hospitals to look at the whole system, and trying to get them to begin working towards right-sizing things. But it's been hard to do during COVID.

I spoke with Tom Reese, a former hospital executive in Vermont, and he's done health care consulting all over the country. And Reese says it doesn't make sense to give hospitals all this money at a time when regulators are trying to cut down on beds.

"We have too much capacity," he said. "We probably have maybe four or five more hospitals than we really need. And we now need to balance what the community needs, and can afford to support, with the fact that we can’t afford everything that we want to have now. It’s not going to be easy. It’ going to painful, but the time is here that that’s got to happen."

And Vermont's not alone on this. Rural hospitals are closing all over the country. We had a bankruptcy here with Springfield Hospital. And when you look at some of our own hospitals that have been losing money year in and year out, you just have to wonder how long we can keep going in this direction.

The other problem, Howard, I imagine, is time. What's the timeline for these hospital budgets?

So the hospital budget presentations start next week. Each hospital gets its own hearing to make a case to the Green Mountain Care Board. The board will listen to the hospitals through August and then start debating just how much money they're going to be able to let the hospital was raised next year. The board's accepting public comments on the hospital budget. So if you pay for insurance or you have any thoughts on how much money you think the hospital should get, you could send your comments to the Green Mountain Care Board.

Have questions, comments, or concerns? Send us a message or tweet your thoughts to @mwertlieb.

Howard Weiss-Tisman is Vermont Public’s southern Vermont reporter, but sometimes the story takes him to other parts of the state.
A graduate of NYU with a Master's Degree in journalism, Mitch has more than 20 years experience in radio news. He got his start as news director at NYU's college station, and moved on to a news director (and part-time DJ position) for commercial radio station WMVY on Martha's Vineyard. But public radio was where Mitch wanted to be and he eventually moved on to Boston where he worked for six years in a number of different capacities at member station a Senior Producer, Editor, and fill-in co-host of the nationally distributed Here and Now. Mitch has been a guest host of the national NPR sports program "Only A Game". He's also worked as an editor and producer for international news coverage with Monitor Radio in Boston.
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